"The Ran (in Nedarim) explains that the exception to the rule of DDD is Eretz Yisroel, which the Ran categorically states that Dina Dmalchusa Dina is inapplicable in Eretz Yisroel, since the Torah declares Eretz Yisroel belongs to Hashem (Vayikra 25:23). Since Hashem is the true property owner, and He has encouraged all of Klal Yisroel to live in Eretz Yisroel and the Ran says as every Yid has a G-d given right to live there, no government in control there ever has the right to charge taxes (and Dina D’malchus does not apply to the rulers in Eretz Yisroel) because they are not the rightful owner of the land. Hashem, as owner, has granted permission for all of Bnei Yisroel to live in His country (what is called the “paltin shel melech” – “the palace of the king”.) This is aside the other reasons that Jews are not bound to the laws of the regime in the holy land. (Without getting into the contentious specifics, i.e. the 3 shvuos, etc.) Thus, the Ran writes his famous shitah, that since all Jews are entitled to live in Israel, there is no dina dmalchusa there. Most Poskim (starting with the Ran and Tosfos) are in agreement that dina d’malchusa dina doesn’t apply in Eretz Yisroel. And it doesn’t apply to a malchus shel risha’a."
from the first post on:
http://www.theyeshivaworld.com/coffeeroom/topic/dina-dmalchusa-dina
